Strategy

Today's consumer cares about corporate reputation

Led by the likes of Procter & Gamble, parent companies are discovering the value of promoting the corporate brands rather than just the product brands.

todaysconsumer

(Illustration: Amedeo De Palma)

The commercial has no products, no voice-over, no sign at all of what’s being sold. Just images of athletes and their mothers. A quick flash of brands follows—Tide, Pampers, Gillette, Duracell—then a slogan: “P&G, proud sponsor of moms.”

Procter & Gamble’s “Thank you, Mom” campaign, rolled out at the London Olympics, is the most ambitious in its history. It’s also part of a growing trend that sees parent companies promoting their overall corporate brands rather than just those of products.

Traditionally, P&G’s customers have been the retailers that, in turn, sell its brands to consumers. But in the new campaign, P&G is pitching the parent company directly to shoppers. It’s not alone. “The first inkling of this that we noticed was in 2005, when Unilever came out with a new logo,” says Nick Parish, North American editor of marketing magazine Contagious. A stylized blue “U” made up of 24 symbols, the logo soon appeared on Unilever brands, from Dove soap to Vaseline lotion, that consumers might not otherwise have known were made by the company.

The idea is, to some extent, a reaction to a new kind of consumer. Shoppers know more than ever about where products come from. As a result, their expectations of the provider have risen dramatically. Today, consumers want to know what a company stands for, what its values are and why. “One argument is that product quality is now just a point of parity, that all organizations have the ability to produce quality product,” says Darren Dahl, a marketing professor at the University of British Columbia. In that environment, the corporate reputation becomes a competitive tool—an emotional bond that ties the consumer to the marketer.

Reputation Institute’s survey of Canada’s largest companies reinforces the power of this emotional appeal, which proved almost twice as important as rational considerations like product quality and innovation in determining consumers’ opinion. A cautionary case in point is Research In Motion. (The company saw the largest drop among Canadian brands, from the 5th spot to 38th.) “They focused all of their attention on the product itself and the engineering, rather than what the experience is like for their core audience,” says Rob Jekielek, a director at the institute. Even when RIM’s products dominated the smartphone market, the company ranked relatively low in so-called enterprise factors, such as corporate citizenship.

Consumers today care about what a company is doing, not just what it’s selling. A rash of corporate scandals over the past decade, from the sub-prime mortgage crisis to the BP oil spill, has produced a default skepticism, Jekielek notes. Consumers now expect companies to really earn their good reputation.

Still, some worry that the pendulum has swung too far in favour of reputational marketing. Kenneth Wong, a professor at Queen’s University, says marketers have become consumed with corporate image. But when every company is trying to develop deeper bonds with the consumer, consumers’ attention is distracted and diluted. Diminishing returns will in time undercut this phenomenon, he says, but for now, “I don’t think you’re going to see anybody let up because nobody has proven there’s a downside to spending on this.”